Ideology Rules!

The accepted and ruling ideology in different countries is perhaps the dominant factor that distinguishes between peoples and countries throughout history. Different ideas of how the world should appear take root in different countries and in effect become a self-fulfilling prophecy of how the country should be governed and how people ought to behave to realise the best possible future for all. Ideology is not uniform across the world and across history, and neither are the conditions under which people come to live in different countries that adopt or are compelled to employ different philosophies of how they should be governed. Objectively, measured on a scale of happiness, the outcomes for different ideologies vary from dismal to great.

Throughout the ages, as a rule the majority of people were content with the conditions and circumstances in which they lived. Until 1789, the accepted model of government was a complete autocracy. This state of affairs tends to be stable, until something brings home the realisation to many people that they are being exploited and life should be much better. That people then seek change happened in France in the late 1700s when the flamboyant life style of the nobility brought home the fact that they, the peasants and commoners, were treated in ways that were no longer acceptable. Their revolution changed France and in due course much of the world.

Since then the world has had a mixture of ruling ideologies that ranged from absolute authority in dictatorships, under an ideology that relied on the principle that ‘might is right’, to the general democracy that has come in vogue more recently. Objectively, democracy sounds pretty nice; in reality, it is the dictatorship of the majority. Then the nature of the country gets determined by the ruling ideology among the majority, with little of the aura of the democratic ideal of ‘for the good of all’ in evidence.

Most ‘old’ European democracies have been on a spectrum that varies from a mild to a more substantial socialist nature. They had the advantage of an educated population that is quite homogeneous in ethnicity and in their liberal ideology. Most of the Asian countries tended to more autocratic political systems, despite most being regarded as nominal democracies. Africa has always been and mostly still is tribal.

The US has been the outlier almost since it has been colonised. The desire to make a success of the venture required innovation, cooperation, commitment and hard work. These demands fostered a spirit that combined a desire – and respect – for individual freedom, with a cohesiveness of purpose in the pursuit of personal and group goals of advancement and wealth. A generally conservative nature was nevertheless fully open to new practical ideas and innovation. No wonder the US grew as spectacularly as it did – to repeat in a much shorter time what Rome did during the few centuries BC.

In the refreshing new US of A of the time, the national focus was predominantly on the increasing of wealth, but real material wealth. The railroads played their part in the opening of the country to accommodate the expansion westwards; immigrants, mostly from Europe, poured into the country, bringing their skills and determination to make a success. The quality of life of the vast majority improved by leaps and bounds.

During these long decades, Europe suffered from wars while Russia and China, caught in stagnation, eventually suffered revolutions of their own followed by imposition of an ideology that stifled innovation and motivation and that did not recognise meritocracy and gave no opportunity to entrepreneurs to seek out and pursue their own destiny. These countries ended in a dead-end street where they remained until they changed their ruling ideologies to allow greater freedom of thought and action. That change put them on the road to impressive economic and general growth.

In the US there is also a revolution going on – one that stealthily has been eroding the pioneering spirit of ‘can do’ to one that is self-satisfied with what has been achieved. One that – as Rome increasingly did during the post BC centuries – confidently relied on its legions to maintain control over the world, while distributing food to the people and providing circuses to entertain them to keep them content and placid. We know today how that ended.

This revolution is speeding up and has been doing so even at greater speed recently. The old notion that each man is master of his own destiny and that of his family and has the responsibility to seek out the best way to achieve this, is being replaced by belief that each person has the in-born right to a life of happiness and it is the responsibility of society to provide this for him - with no obligation on his part to make a meaningful contribution. This process is still under way and we should wait and see what happens when the increasingly popular ideology of Universal Basic Income gets established as the corner stone of the New America!

America is losing its commitment to free speech; it still promotes the realisation of equal opportunity for all, but is demanding that everyone use opportunity with equal success; all people should be the same in their achievements, a goal that can only be achieved by handicapping those who insist on excelling and using all their talents. This desire for uniformity in performance – everyone being treated the same and having similar opportunities – pursues the exact ideal that made countries under Communist rule such dismal places. It is a world such as described in Orwell’s 1984. This perhaps sums up what is changing in America – some principles on which the new curriculum for mathematics in schools in California is to be based.

During 2021 the trend in the US to such a world has accelerated. The changes have been so obvious, and hopefully also alarming for many people, that these do not need to be listed. Whether this trend can be stopped and reversed remains to be seen.

Meanwhile, suppression of the prices of gold and silver continues. Whether this is no more than mere reflex on the part of the Cartel or whether they can see long term success should they do so, is not clear. Given apparently sustained increased buying of silver in particular and the still not definite effect of Basel III on the storage of the metals, it is still a waiting game before we can be certain that the gold and silver bull markets will resume soon.

It is accepted that in the longer term the metal prices will break free, but when?

Euro–Dollar

Euro–dollar, last = $1.2170 (www.investing.com)

The new euro rally managed to break clear above the resistance at line C on its third attempt, but then failed to hold the marginal break into the steep bull channel XY. The failure also had the euro at the end of the week back to just below line C again.

This week should show whether that retreat was no more than the usual end of the week adjustment to make the dollar look good, or whether the euro deserves to settle in the steeper channel XY for the near to perhaps medium term. Should the support along line C continue to hold, the odds of it extending higher will improve.

DJIA daily close

DJIA. last = 34207.84 (money.cnn.com)

The DJIA continues to display admirable resilience in its ability to recover from intra-day lows. Either the loss is much reduced or the recovery ends with a positive result for the trading day. The result is a mainly sideways churning near the recent all time highs. Wall Street continues to surprise the many commentators and advisors that have been advising readers and subscribers to prepare for a repeat of 2008/9 and to take advantage of the opportunities it will present.

Yet, the long time Bears have to keep on digging into their wallets to settle the margin calls as equity prices trend higher. Can so many clever people be wrong for so long not to be proven right in the not too distant future?

Gold London PM fix – Dollars

old price – London PM fix, last = $1875.90 (www.kitco.com)

The recovery in the price of gold since the end of the sell-off in early April proceeded in fits and starts as the price suppression continues. So far the campaign to remove the metals from circulation has not yet had the effect of reversing the suppression. It is, however, important to keep in mind the publicity that the Reddit Apes have given to this solution and one can expect that the campaign has to continue and gain much more momentum before it will have the desired effect on the suppression.

At least the price has broken above the strong channel YZ and – so far at least – is holding the break as this week takes off.

Euro–gold PM fix

Last week the euro held firm against the dollar and gold improved some but remained under a cap, so that gold priced in euro did little more than add a small gain. Similar to the dollar price of gold, euro gold is holding in its bull channel, moving slowly away from its lower boundary.

Other than dollar gold, the euro price still has some way to go to challenge the next level of resistance at line D. With gold being held well below the psychological $1900 level, further gains in the euro price have to rely on less weakness in the dollar to balance out the lack of progress in the dollar price. New dollar strength appears to be of rather low probability, so that a break higher above the resistance has to wait for a possible gold rally in June.

Euro gold price – PM fix in Euro. Last = €1539.75 (www.kitco.com)

Silver Daily London Fix

Silver daily London fix, last = $27.80 (www.kitco.com)

On Tuesday last week, the London silver fix spiked higher by almost a dollar on the Monday fix, but hopes for the metal flared up in vain. By Wednesday the London fix was back at $27.88 from the Tuesday high fix at $28.475 and also back below the briefly penetrated resistance at lines Q and A.

The break higher has to be repeated and then hold to revive the rally.

U.S. 10–year Treasury Note

U.S. 10–year Treasury note, last = 1.623% (www.investing.com )

There is still nothing more to say about the yield on the YS 10-year Treasury note. It has become remarkably range bound and quiet despite all the signs of higher inflation and admissions that this is so, but that it will be ‘only temporary’. There are no more ‘bond market vigilantes’ that attracted so much attention in years gone past whenever the bond yields no longer reflected the realities of economic life.

It would not surprise to learn in due course that despite rumours of foreign selling of US Treasuries that should push yields higher, yields are being artificially capped.

West Texas Intermediate crude. Daily close

If there happens to be a mounting belief that mathematics problems can have more than one correct answer, would it be a surprise to find out that there can be more than one true price for the same commodity? In the case of gold and silver this is known to be true. However, with the scarcity of gasoline and presumably other fossil energy, it is strange that the price of crude oil has remained so stable in recent weeks and then even dipped lower last week amidst the gasoline crisis.

Strange indeed.

WTI crude – Daily close, last = $63.58 (www.investing.com )

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